Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From the Republic of Korea; Notice of Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results of antidumping duty administrative review.

SUMMARY:

In response to requests from four respondents and from the petitioners, the Department of Commerce (“the Department”) is conducting (the seventh) administrative reviews of the antidumping duty orders on certain cold-rolled and corrosion-resistant carbon steel flat products from Korea. The corrosion-resistant carbon steel flat products review covers four manufacturers and exporters of the subject merchandise, while the cold-rolled carbon steel flat products review covers three. The period of review for cold-rolled products is August 1, 1999 through December 31, 1999, and the period of review for corrosion-resistant products is August 1, 1999 through July 31, 2000.

We preliminarily determine that a dumping margin exists for certain products and companies for their sales in the United States. See “Preliminary Results of the Review” section of this notice. If these preliminary results are adopted in our final results of administrative reviews, we will instruct U.S. Customs to assess antidumping duties on entries of the affected companies' merchandise during the period of review (“POR”).

Interested parties are invited to comment on these preliminary results. Parties who submit arguments in this proceeding are requested to submit with the argument: (1) A statement of the issue; and (2) a brief summary of the argument.

EFFECTIVE DATE:

September 11, 2001.

FOR FURTHER INFORMATION CONTACT:

Marlene Hewitt (Dongbu Steel Co., Ltd. (“Dongbu”)), Robert Bolling (Pohang Iron and Steel Co. (“POSCO”), Pohang Coated Steel Co., Ltd. (“POCOS”), and Pohang Steel Industries Co., Ltd. (“PSI”)—(collectively, “the POSCO Group”)), Sarah Ellerman (SeAH Steel Corporation (“SeAH”)), Mesbah Motamed (Union Steel Manufacturing Co., Ltd. (“Union”)) or James Doyle, Enforcement Group III—Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Room 7866, Washington, DC 20230; telephone (202) 482-1385 (Hewitt), 482-3434 (Bolling), 482-6134 (Ellerman), 482-1382 (Motamed), or 482-0159 (Doyle).

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (“the Act”) by the Uruguay Round Agreements Act (“URAA”). In addition, unless otherwise indicated, all citations to the Department's regulations are references to the provisions codified at 19 CFR Part 351 (2000).

Background

The Department published antidumping duty orders on certain cold-rolled and corrosion-resistant carbon steel flat products from Korea on August 19, 1993. See Antidumping Duty Orders on Certain Cold-Rolled Carbon Steel Flat Products and Certain Corrosion-Resistant Carbon Steel Flat Products from Korea, 58 FR 44159 (August 19, 1993). On August 16, 2000, the Department published a notice of “Opportunity to Request an Administrative Review” of the antidumping duty orders for the 1999-2000 review period. See Notice of Opportunity to Request Administrative Review of Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation, 65 FR 49962 (August 16, 2000). On August 31, 2000, respondents Dongbu, Union, and the POSCO Group requested that the Department conduct an administrative review of the antidumping duty orders on cold-rolled carbon steel flat products from Korea. In a separate letter on August 31, 2000, the POSCO Group also requested partial revocation of the antidumping duty order of cold-rolled carbon steel flat products. On August 31, 2000, respondents Dongbu, Union, the POSCO Group, and SeAH requested that the Department conduct an administrative review of the antidumping duty orders on corrosion-resistant carbon steel flat products. On August 31, 2000, petitioners in the original less-than-fair-value (“LTFV”) investigations (AK Steel Corporation; Bethlehem Steel Corporation; Inland Steel Industries, Inc.; LTV Steel Company; National Steel Corporation; and U.S. Steel Group-a-Unit of USX Corporation) requested that the Department conduct administrative reviews of the antidumping duty orders on cold-rolled and corrosion-resistant carbon steel flat products from Korea: the cold-rolled respondents; Dongbu, the POSCO Group, and Union; and the corrosion-resistant respondents; Dongbu, the POSCO Group, SeAH, and Union. We initiated these reviews on September 26, 2000. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 65 FR 58733 (October 2, 2000).

The Department issued Sections A, B, C, and D questionnaires to all respondents on October 4, 2000, with the exception of SeAH, to which the Department issued Section A, B, and C. On December 15, 2000, the Department revoked the antidumping order on cold-rolled carbon steel products from Korea pursuant to section 751(d)(2) of the Act, effective January 1, 2000. See Revocation of Antidumping and Countervailing Duty Orders on Certain Carbon Steel Products From Canada, Germany, Korea, the Netherlands, and Sweden, 65 FR 78467 (December 15, 2000). At that time, the Department instructed all interested parties to revise their submissions to reflect the new POR for cold-rolled products. The resulting POR for cold-rolled products is August 1, 1999 through December 31, 1999. The Department's revocation of the antidumping order for cold-rolled products renders the POSCO Group's request for revocation moot.

Under section 751(a)(3) of the Act the Department may extend the deadline for completion of administrative reviews if it determines that it is not practicable to complete the review within the statutory time limit of 365 days. On January 30, 2001, the Department extended the time limits for the preliminary results in these cases to August 31, 2001. See Certain Cold-Rolled Carbon Steel Flat Products and Certain Corrosion-Resistant Carbon Steel Flat Products from Korea: Antidumping Duty Administrative Reviews: Extension of Time Limit, 66 FR 8197 (January 30, 2001).

Dongbu

On November 8, 2000, Dongbu reported that it made sales of subject merchandise to the United States during the period of review in its response to Section A of the Department's questionnaire. On December 18, 2000, Dongbu submitted its responses to Sections B, C, and D of the Department's questionnaire. On March 15, 2001, the Department issued a supplemental questionnaire for Sections A and B of Dongbu's questionnaire response. On April 4, 2001, Dongbu submitted its response to the Department's first supplemental questionnaire. On May 30, 2001, the Department issued a supplemental questionnaire for Sections C and D of Dongbu's questionnaire response. On June 20, 2001, Dongbu submitted its response to the Department's Section C and D supplemental questionnaire. On June 22, 2001, the Department issued its second supplemental questionnaire for Sections A through D. On July 2, 2001, Dongbu submitted its response to the second supplemental questionnaire.

The POSCO Group

On November 3, 2000, POSCO requested that the Department not require it to report downstream service center sales for this POR because the facts are different from previous administrative review. On November 9, 2000, petitioners provided a letter to the Department stating that the Department should verify the POSCO Group's statement that the facts have changed in this POR, and determine whether the POSCO Group should report its downstream service center sales. On November 13, 2000, the POSCO Group reported that it made sales of subject merchandise to the United States during the period of review in its response to Section A of the Department's questionnaire. On December 18, 2000, the POSCO Group submitted its responses to Sections B, C, and D of the Department's questionnaire. On February 8, 2001, the Department determined that the POSCO Group only had to report certain of its affiliated service center sales. See Memo from Robert Bolling to Edward Yang, dated February 8, 2001. On March 2, 2001, the Department issued a supplemental questionnaire for Sections A, B, and C of the POSCO Group's questionnaire response. On March 12, 2001, the Department issued a supplemental questionnaire for Section D of the POSCO Group's questionnaire response. On March 30, 2001, the POSCO Group submitted its response to the Department's first set of supplemental questionnaires and its service center section B response. On April 9, 2001, the POSCO Group submitted its response to the Department's Section D supplemental questionnaire. On June 18, 2001, the Department issued its second supplemental questionnaire for Sections A through C and the POSCO Group's downstream sales. On July 10, 2001, the POSCO Group submitted its response to the second supplemental questionnaire.

SeAH

On November 13, 2000, SeAH submitted its response to Section A of the Department's questionnaire. On December 18, 2000, SeAH submitted its response to Sections B and C of the Department's questionnaire.

On December 26, 2001, petitioners alleged SeAH made home market sales at prices below the cost of production. On March 7, 2001, the Department issued a supplemental questionnaire regarding Sections A, B, and C of SeAH's questionnaire response. On March 12, 2001, we initiated a cost of production investigation of SeAH's sales and requested that SeAH complete Section D of the Department's questionnaire. See Memorandum from Sarah Ellerman to Edward Yang, Allegation of Sales Below the Cost of Production for SeAH Steel Corporation, dated March 12, 2001. On March 21, 2001, SeAH submitted its response to the Department's Sections A, B, and C supplemental questionnaire. On April 18, 2001, SeAH submitted its Section D response to the Department's questionnaire. On May 7, 2001, SeAH submitted its cost reconciliation. On June 15, 2001, the Department issued a supplemental questionnaire regarding Section D of SeAH's questionnaire response. On June 29, 2001, SeAH submitted its response to the Section D supplemental questionnaire. On July 3, 2001, the Department issued a verification outline to SeAH. We verified sales and cost information provided by SeAH from July 10, 2001 to July 14, 2001. On July 23 and July 30, 2001, SeAH submitted minor corrections to its response. On July 5, 2001, the Department issued a third supplemental questionnaire to SeAH. SeAH submitted its response to the third supplemental questionnaire on July 26, 2001.

Union

On November 8, 2000, Union reported that it made sales of subject merchandise to the United States during the period of review in its response to Section A of the Department's questionnaire. Union submitted its response to Sections B, C, and D on December 18, 2000. On March 2, 2001, the Department issued a supplemental questionnaire for Sections A, B, and C, and on March 13, 2001, the Department issued a supplemental questionnaire for Section D. Union submitted its Sections A, B, and C response on March 23, 2001, and its Section D response on April 10, 2001. Following the Department's second supplemental questionnaire for Sections A through D, Union submitted its supplemental response on June 6, 2001. Finally, on July 24, 2001, Union submitted its response to the Department's June 22, 2001, request for information.

The Department is conducting these administrative reviews in accordance with section 751 of the Act.

Period of Review

For corrosion-resistant carbon steel products, the POR is August 1, 1999 through July 31, 2000. As a result of the Department's recent revocation of the antidumping order for cold-rolled carbon steel products pursuant to 751(d)(2) of the Act, the POR for cold-rolled carbon steel products is August 1, 1999 through December 31, 1999. See discussion supra at page 4. These reviews cover entries from Dongbu, SeAH, Union, and the POSCO Group (see “Affiliated Parties” section below).

Verification

As provided in section 782(i) of the Act, we verified the information submitted by SeAH for use in our preliminary results. We used standard verification procedures, including examination of relevant accounting and production records and original source documents provided by SeAH. We verified sales and cost information provided by SeAH from July 10, 2001 to July 14, 2001. Our verification results are outlined in the public version of the verification report and are on file in the Central Records Unit (“CRU”) located in room B-099 of the main Department of Commerce Building, 14th Street and Constitution Avenue, N.W., Washington, D.C. See Sales and Cost Verification Report from Sarah Ellerman and Michael Strollo through Jim Doyle to the File, dated August 31, 2001.

Scope of the Reviews

The review of “certain cold-rolled carbon steel flat products” covers cold-rolled (cold-reduced) carbon steel flat-rolled products, of rectangular shape, neither clad, plated nor coated with metal, whether or not painted, varnished or coated with plastics or other nonmetallic substances, in coils (whether or not in successively superimposed layers) and of a width of 0.5 inch or greater, or in straight lengths which, if of a thickness less than 4.75 millimeters, are of a width of 0.5 inch or greater and which measures at least 10 times the thickness or, if of a thickness of 4.75 millimeters or more are of a width which exceeds 150 millimeters and measures at least twice the thickness, as currently classifiable in the Harmonized Tariff Schedule (“HTS”) under item numbers 7209.15.0000, 7209.16.0030, 7209.16.0060, 7209.16.0090, 7209.17.0030, 7209.17.0060, 7209.17.0090, 7209.18.1530, 7209.18.1560, 7209.18.2550, 7209.18.6000, 7209.25.0000, 7209.26.0000, 7209.27.0000, 7209.28.0000, 7209.90.0000, 7210.70.3000, 7210.90.9000, 7211.23.1500, 7211.23.2000, 7211.23.3000, 7211.23.4500, 7211.23.6030, 7211.23.6060, 7211.23.6085, 7211.29.2030, 7211.29.2090, 7211.29.4500, 7211.29.6030, 7211.29.6080, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7215.50.0015, 7215.50.0060, 7215.50.0090, 7215.90.5000, 7217.10.1000, 7217.10.2000, 7217.10.3000, 7217.10.7000, 7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090. Included in this review are flat-rolled products of non-rectangular cross-section where such cross-section is achieved subsequent to the rolling process (i.e., products which have been “worked after rolling”)—for example, products which have been beveled or rounded at the edges. Excluded from this review is certain shadow mask steel, i.e., aluminum-killed, cold-rolled steel coil that is open-coil annealed, has a carbon content of less than 0.002 percent, is of 0.003 to 0.012 inch in thickness, 15 to 30 inches in width, and has an ultra flat, isotropic surface.

The review of “certain corrosion-resistant carbon steel flat products” covers flat-rolled carbon steel products, of rectangular shape, either clad, plated, or coated with corrosion-resistant metals such as zinc, aluminum, or zinc-, aluminum-, nickel- or iron-based alloys, whether or not corrugated or painted, varnished or coated with plastics or other nonmetallic substances in addition to the metallic coating, in coils (whether or not in successively superimposed layers) and of a width of 0.5 inch or greater, or in straight lengths which, if of a thickness less than 4.75 millimeters, are of a width of 0.5 inch or greater and which measures at least 10 times the thickness or, if of a thickness of 4.75 millimeters or more are of a width which exceeds 150 millimeters and measures at least twice the thickness, as currently classifiable in the HTS under item numbers 7210.30.0030, 7210.30.0060, 7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000, 7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530, 7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090. Included in this review are flat-rolled products of non-rectangular cross-section where such cross-section is achieved subsequent to the rolling process (i.e., products which have been “worked after rolling”)—for example, products which have been beveled or rounded at the edges. Excluded from this review are: flat-rolled steel products either plated or coated with tin, lead, chromium, chromium oxides, both tin and lead (“terne plate”), or both chromium and chromium oxides (“tin-free steel”), whether or not painted, varnished or coated with plastics or other nonmetallic substances in addition to the metallic coating; clad products in straight lengths of 0.1875 inch or more in composite thickness and of a width which exceeds 150 millimeters and measures at least twice the thickness; and certain clad stainless flat-rolled products, which are three-layered corrosion-resistant carbon steel flat-rolled products less than 4.75 millimeters in composite thickness that consist of a carbon steel flat-rolled product clad on both sides with stainless steel in a 20%-60%-20% ratio.

These HTS item numbers are provided for convenience and Customs purposes. The written descriptions remain dispositive.

Transactions Reviewed

For these preliminary results, we have accepted PSI's reporting methodology for overruns and have excluded reported overrun sales in the home market from our sales comparisons because such sales were outside the ordinary course of trade. This is consistent with the methodology we accepted in prior reviews. However, the Department may conduct verification of PSI's overrun methodology in this review.

Dongbu

We have reviewed Dongbu's original and supplemental questionnaire submissions, and according to our analysis of those submissions, the Department has determined that Dongbu had no “downstream” sales by affiliated resellers in the home market during the POR. Therefore, the Department reviewed all home market transactions in its determination of NV.

The POSCO Group

According to 19 CFR 351.403(d), downstream sales to home market affiliates accounting for less than five percent of total sales are normally excluded from the normal value (“NV”) calculation. See also 773(a)(5) of the Act. In a November 3, 2000 letter to the Department, POSCO stated that it sold its interest in the majority of its affiliated resellers/service centers. However, as the POSCO Group's sales to its remaining affiliated resellers exceeded the Department's five percent threshold, the Department has required the POSCO Group to report the home market downstream sales for these affiliated service centers.

The Department examined whether the sales the POSCO Group made to these affiliated service centers were comparable to the price at which POSCO Group sold the subject merchandise to unaffiliated purchasers (i.e. “the arm's length test”). See 19 CFR 351.403(c). To test whether the POSCO Group's sales were made at arm's length, we compared the prices of sales to affiliated and unaffiliated customers net of all movement charges, direct selling expenses, discounts and packing. Where prices to the affiliated parties were on average 99.5 percent or more of the price to the unaffiliated party, we determined that those sales made to the related party were at arm's length and reviewed these sales in our determination of normal value. If the sales to the affiliated service centers did not pass the arm's length test, we reviewed the resales made by these affiliated service centers in our determination of normal value. Where the arm's length test could not be applied because identical merchandise was not sold to unaffiliated customers, we were unable to determine that these sales were made at arm's length and, therefore, excluded them from our analysis. See Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 (July 9, 1993). Where the exclusion of such sales eliminated all sales of the most appropriate comparison product, we made comparisons to the next most similar model.

SeAH

Based on our review of the submission by SeAH, the Department reviewed all home market transactions in its determination of NV.

Union

Based on our review of the submission by Union, the Department reviewed all home market transactions in its determination of NV.

Affiliated Parties

For purposes of these reviews, we are treating POSCO, POCOS, and PSI as affiliated parties and have “collapsed” them, i.e., treated them as a single producer of certain cold-rolled carbon steel flat products (POSCO and PSI) and certain corrosion-resistant carbon steel flat products (POSCO, POCOS, and PSI). We refer to the collapsed respondent as the POSCO Group. POSCO, POCOS, and PSI were treated as collapsed in a previous segment of these proceedings. See, e.g., Preliminary Determinations of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products from Korea, 61 FR 51882, 51884 (October 4, 1996). The POSCO Group has submitted no new information which has caused us to reconsider that determination.

As we have determined in past administrative reviews, we are treating Union and Dongkuk Industries Co., Ltd. (“DKI”) as a single producer of certain cold-rolled carbon steel flat products. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From Korea: Preliminary Results of Antidumping Duty Administrative Reviews, 60 FR 65284 (December 19, 1995). Additionally, we are treating Union and DKI as a single producer of certain corrosion-resistant carbon steel flat products. See Collapsing Memorandum from Marlene Hewitt to Edward Yang, dated August 31, 1999; Memorandum from Marlene Hewitt to the File, dated August 15, 2001. No new information has been submitted which has caused us to reconsider that determination.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all cold-rolled carbon steel flat products produced by the respondents, covered by the descriptions in the “Scope of the Reviews” section of this notice, supra, and sold in the home market during the POR, to be foreign like products for the purpose of determining appropriate product comparisons to U.S. sales of cold-rolled carbon steel flat products. Likewise, we considered all corrosion-resistant carbon steel flat products produced by the respondents and sold in the home market during the POR to be foreign like products for the purpose of determining appropriate product comparisons to corrosion-resistant carbon steel flat products sold in the United States.

For the “quality” product characteristic, Dongbu reported an additional sub-code. The Department has included the additional code that Dongbu reported in the aforementioned category in the Department's product matching methodology. See Memorandum from Marlene Hewitt to the File: Preliminary Results Analysis Memo, dated August 31, 2001.

Where there were no sales in the ordinary course of trade of identical merchandise in the home market to compare to U.S. sales, we compared U.S. sales to the next most similar foreign like product on the basis of the characteristics listed in Appendix V of the Department's antidumping questionnaire. In making the product comparisons, we matched foreign like products based on the physical characteristics reported by the respondent. Where sales were made in the home market on a different weight basis from the U.S. market (theoretical versus actual weight), we converted all quantities to the same weight basis, using the conversion factors supplied by the respondents, before making our fair-value comparisons.

Normal-Value Comparisons

To determine whether sales of certain cold-rolled and corrosion-resistant carbon steel flat products by the respondents to the United States were made at less than normal value, we compared the export price (“EP”) or constructed export price (“CEP”) to the normal value (“NV”), as described in the “Export Price/Constructed Export Price” and “Normal Value” sections of this notice. In accordance with section 777A(d)(2) of the Act, we calculated monthly weighted-average prices for NV and compared these to individual U.S. transactions.

Date of Sale

It is the Department's practice normally to use the invoice date as the date of sale, although we may use a date other than the invoice date if we are satisfied that a different date better reflects the date on which the exporter or producer establishes the material terms of sale. See 19 CFR 351.401(i). We have preliminarily determined that there is no reason to depart from the Department's treatment of invoice date as the date of sale for respondents Dongbu, the POSCO Group, and Union. Consistent with prior reviews, for home market sales, we used the reported date of the invoice from the Korean manufacturer; for U.S. sales we have followed the Department's methodology from the prior reviews, and have based date of sale on invoice date from the U.S. affiliate, unless that date was subsequent to the date of shipment to the unaffiliated customer from Korea, in which case that shipment date is the date of sale. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Preliminary Results, 65 FR 54197, 54201 (September 7, 2000), and see Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Final Results of Antidumping Duty Administrative Reviews, 66 FR 3540 (January 16, 2001). Additionally, SeAH reported its date of sale in the home market to be the invoice date and its date of sale in the U.S. market to be the purchase order date. At verification, the Department confirmed SeAH's claim that purchase order date is the proper date of sale for all of its U.S. sales because the material terms of sale are set at the purchase order date and not the invoice date. See Sales and Cost Verification Report from Sarah Ellerman and Michael Strollo through Jim Doyle to the File, dated August 31, 2001. Thus, we have preliminarily determined to use invoice date in the home market and purchase order date in the U.S. as date of sale for SeAH.

Export Price/Constructed Export Price

We calculated the price of U.S. sales based on constructed export price, in accordance with section 772(b) of the Act. The Act defines the term “constructed export price” as “the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter, as adjusted under subsections (c) and (d).” In contrast, “export price” is defined as “the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States.” Sections 772(a) and (b) of the Act (emphasis added).

In determining whether to classify U.S. sales as either export price (“EP”) or constructed export price (“CEP”), the Department must examine the totality of the circumstances surrounding the U.S. sales process, and assess whether the reviewed sales were made “in the United States” for purposes of section 772(b) of the Act. In the instant case, the record establishes that Dongbu's, the POSCO Group's, and Union's affiliates in the United States (1) took title to the subject merchandise; and (2) invoiced and received payment from the unaffiliated U.S. customers. Thus, the Department has determined that these U.S. sales should be classified as CEP transactions. Additionally, the record establishes that SeAH has an affiliate in the United States which invoiced and received payment in the United States from the unaffiliated customer for SeAH's U.S. sales. Thus, the Department has determined that SeAH's U.S. sales should be classified as CEP transactions.

For Dongbu, the POSCO Group, SeAH and Union, we calculated CEP based on packed prices to unaffiliated customers in the United States. Where appropriate, we made deductions from the starting price for foreign inland freight, foreign inland insurance, foreign brokerage and handling, international freight, marine insurance, U.S. warehousing expenses, U.S. wharfage, U.S. inland freight, U.S. brokerage and handling, loading expenses, other U.S. transportation expenses, U.S. Customs duties, commissions, credit expenses, letter of credit expenses, warranty expenses, other direct selling expenses, inventory carrying costs incurred in the United States, and other indirect selling expenses in the country of manufacture and the United States associated with economic activity in the United States. Pursuant to section 772(d)(3) of the Act, we made an adjustment for CEP profit. Where appropriate, we added interest revenue to the gross unit price.

In order to ensure that we have accounted for all appropriate U.S. interest expenses (i.e. both imputed and actual) without double-counting, we have utilized the following interest expense methodology. As in the prior review, in our U.S. indirect selling expenses, we have included net financial expenses incurred by the respondent's U.S. affiliates; however, we added U.S. interest expenses only after deducting U.S. imputed credit expenses and U.S. inventory carrying costs, so as to eliminate the possibility of double-counting U.S. interest expenses.

Consistent with the Department's normal practice, we added the reported duty drawback to the gross unit price. We did so in accordance with the Department's long-standing test, which requires: (1) That the import duty and rebate be directly linked to, and dependent upon, one another; and (2) that the company claiming the adjustment demonstrate that there were sufficient imports of imported raw materials to account for the duty drawback received on the exports of the manufactured product. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Preliminary Results, 65 FR 54197, 54202 (September 7, 2000).

Normal Value

Based on a comparison of the aggregate quantity of home market and U.S. sales, we determined that the quantity of the foreign like product sold in the exporting country was sufficient to permit a proper comparison with the sales of the subject merchandise to the United States, pursuant to section 773(a) of the Act. Therefore, in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on the price at which the foreign like product was first sold for consumption in the home market, in the usual commercial quantities and in the ordinary course of trade.

Where appropriate, we deducted rebates, discounts, inland freight (offset, where applicable, by freight revenue), inland insurance, and packing. Additionally, only for the POSCO Group, we made a deduction for affiliated foreign service centers' adjustments. We made adjustments to NV, where appropriate, for differences in credit expenses (offset, where applicable, by interest income), warranty expenses, post-sale warehousing, and differences in weight basis. We also made adjustments, where appropriate, for home market indirect selling expenses and inventory carrying costs to offset U.S. commissions in CEP comparisons.

We also increased NV by U.S. packing costs in accordance with section 773(a)(6)(A) of the Act. We made adjustments to NV for differences in cost attributable to differences in physical characteristics of the merchandise, pursuant to section 773(a)(6)(C)(ii) of the Act. In accordance with the Department's practice, where all contemporaneous matches to a U.S. sale observation resulted in difference-in-merchandise adjustments exceeding 20 percent of the cost of manufacturing (“COM”) of the U.S. product, we based NV on constructed value (“CV”). See 19 CFR 351.411.

Cost of Production/Constructed Value

At the time the questionnaires were issued in these reviews, the fifth annual administrative reviews were the most recently completed segments of these proceedings. In accordance with section 773(b)(2)(A)(ii) of the Act, and consistent with the Department's practice, because we disregarded certain below-cost sales by Dongbu, the POSCO Group, and Union in the fifth reviews (SeAH was not reviewed in the fifth administrative review), we found reasonable grounds to believe or suspect that these respondents made sales in the home market at prices below the cost of producing the merchandise. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Preliminary Results, 65 FR 54197, 54203 (September 7, 2000). We, therefore, initiated cost investigations with regard to Dongbu, the POSCO Group, and Union in order to determine whether these respondents made home market sales during the POR at prices below their cost of production (COP) within the meaning of section 773(b)(2)(A)(ii) of the Act. Additionally, on March 12, 2001, following petitioners' allegation of sales below the cost of production, we initiated a cost of production investigation of SeAH's sales. See Memorandum from Sarah Ellerman to Edward Yang, Allegation of Sales Below the Cost of Production for SeAH Steel Corporation, dated March 12, 2001; See Letter from Skadden, Arps, Slate, Meagher and Flom to Secretary Mineta, dated December 26, 2001.

Before making concordance matches, we conducted the COP analysis described below.

A. Calculation of COP

We calculated a company-specific COP for Dongbu, the POSCO Group, SeAH, and Union based on the sum of each respondent's cost of materials and fabrication for the foreign like product, plus amounts for home-market selling expenses, general, and administrative expenses (“SG&A”), and packing costs in accordance with section 773(b)(3) of the Act. We relied on Dongbu's, the POSCO Group's, SeAH's and Union's information as submitted.

B. Test of Home-Market Prices

For the POSCO Group, SeAH, and Union, we used each of respondents' weighted-average COP, as adjusted (see “Calculation of COP” above), for the period July 1999 to June 2000, as reported. Dongbu's COP and CV figures were calculated based on costs incurred by Dongbu during the period July 1, 1999 through December 31, 1999 and July 1, 1999 through June 30, 2000, as reported, for cold-rolled and corrosion resistant products respectively. We compared the weighted-average COP figures to home-market sales of the foreign like product as required under section 773(b) of the Act. In determining whether to disregard home-market sales made at prices below the COP, as required under section 773(b)(1)(A) and (B) of the Act, we examined whether (1) within an extended period of time, such sales were made in substantial quantities, and (2) such sales were made at prices which permitted the recovery of all costs within a reasonable period of time. On a product-specific basis, we compared the COP to the home-market prices (not including VAT), less any applicable movement charges, discounts, and rebates.

C. Results of COP Test

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of a respondent's sales of a given product were at prices less than the COP, we did not disregard any below-cost sales of that product because we determined that the below-cost sales were not made in “substantial quantities.” Where 20 percent or more of a respondent's sales of a given product during the POR were at prices less than the COP, we found that sales of that model were made in “substantial quantities” for an extended period of time, in accordance with sections 773(b)(2)(B) and (C) of the Act, and were not at prices which would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. In such cases, we disregarded the below-cost sales in accordance with section 773(b)(1) of the Act.

D. Calculation of CV

In accordance with section 773(e)(1) of the Act, we calculated constructed value (CV) for Dongbu, the POSCO Group, SeAH, and Union based on the sum of each respondent's cost of materials, fabrication, SG&A, including interest expenses, U.S. packing costs, and profit. In accordance with section 773(e)(2)(A) of the Act, we based SG&A and profit on the actual amounts incurred and realized by the respondent in connection with the production and sale of the foreign like product in the ordinary course of trade, for consumption in the foreign country. For selling expenses, we used the weighted-average home-market selling expenses. We also made adjustments, where appropriate, for home-market indirect selling expenses to offset U.S. commissions in CEP comparisons.

Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent practicable, we determine NV based on sales in the comparison market at the same level of trade (“LOT”) as the EP or CEP transaction. The NV LOT is that of the starting-price sales in the comparison market, or when NV is based on constructed value (“CV”), that of the sales from which we derive selling, general and administrative (“SG&A”) expenses and profit. For EP, the U.S. LOT is also the level of the starting-price sale, which is usually from exporter to importer. For CEP, it is the level of the constructed sale from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP or CEP, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. If the comparison market sales are at a different LOT, and the difference affects price comparability as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison market sales at the LOT of the export transaction, we make an LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is more remote from the factory than the CEP level and there is no basis for determining whether the difference in levels between NV and CEP affects price comparability, we adjust NV under section 773(a)(7)(B) of the Act (the CEP offset provision). See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731, 61732 (November 19, 1997).

In reviewing the selling functions reported by the respondents, we examined all types of selling functions and activities reported in respondent's questionnaire response on LOT and during verification. In analyzing whether separate LOTs existed in this review, we found that no single selling function was sufficient to warrant a separate LOT in the home market. See Antidumping Duties; Countervailing Duties, Final Rule, 63 FR 65347 (November 25, 1998).

Dongbu

In its questionnaire response, Dongbu stated that there were no significant differences in its selling activities by customer categories within or between the home market and the United States. Therefore, Dongbu stated that it was not distinguishing between LOT for these reviews and that it was not claiming a level of trade adjustment nor claiming a CEP offset. See Dongbu's November 8, 2000 Section A at 16. To determine whether an adjustment is necessary, in accordance with the principles discussed above, we examined information regarding the distribution systems in both the United States and home markets, including the selling functions, classes of customer, and selling expenses.

Our analysis of the questionnaire responses detailing the selling functions provided by Dongbu in the home market shows that Dongbu sold subject merchandise through one channel of distribution to two classes of customers in the home market: distributor/service centers and end user. See Dongbu's November 8, 2000 Section A at 12. Dongbu reported that there were no differences in its selling functions performed for the different classes of customers and its support services were the same for all classes, including limited warehousing, processing of claims for delivery of defective merchandise, after sales services and warranties, freight and delivery arrangements, and credit terms. See Dongbu's December 18, 2000 Response.

In the U.S. market, Dongbu reported two channels of distribution in the United States: 1) Dongbu Steel to Dongbu Corporation to Dongbu USA to U.S. customer; 2) Dongbu Steel to Dongbu USA to U.S. customer. See Dongbu's November 8, 2000 Section A at 12. Dongbu stated that the U.S. customers included distributors or service centers, and end users. Dongbu claimed that the scope of selling functions performed in connection with U.S. sales were identical for both end users and distributors and there were no significant difference in selling activities by customer categories within or between each market. Thus Dongbu performed the same sales-related activity in both channels of distribution, including credit terms, inventory maintenance, warranties, and freight. Based on Dongbu's record of sales related activities in its two channels of distribution, we preliminary determine that there is one LOT in the U.S. market.

We also note that the selling functions described by Dongbu in these reviews are consistent with the selling functions described for the previous reviews of these orders, in which we determined no distinct levels of trade. See Notice of Preliminary Results: Certain Cold-Rolled Carbon Steel Flat Products and Certain Corrosion-Resistant Carbon Steel Flat Products from Korea, 64 FR 48767, 48772 (September 9, 1999) and 66 FR 3540 (January 16, 2000).

We have analyzed the evidence, and determined that the selling functions performed on sales to the U.S. importer are the same as provided in the home market. As a result, we preliminary determine that the selling functions between both markets do not significantly differ, and therefore, sales in the home market and the U.S. market were made at the same level of trade. Therefore, all price comparisons are at the same level of trade and any adjustment pursuant to section 773(a)(7) of the Act is unwarranted.

The POSCO Group

In the current review, the POSCO Group stated that it is not claiming a level of trade adjustment, nor has it claimed a CEP offset. See The POSCO Group's December 18, 2000 Section B at 53. To determine whether an adjustment is necessary, in accordance with the principles discussed above, we examined information regarding the distribution systems in both the United States and home markets, including the selling functions, classes of customer, and selling expenses.

In its questionnaire responses, the POSCO Group stated that its home-market sales by affiliated service centers were at a different level of trade than its other home-market sales and its U.S. sales. See The POSCO Group's November 13, 2000 Section A at 29. The respondent indicated that the service centers provide certain selling functions to all of their customers, while POSCO, POCOS and PSI provide a different set of selling functions to all of their customers (including the service centers).

In order to confirm the presence of separate levels of trade within or between the U.S. and home markets, we examined the respondent's questionnaire responses for indications of substantive differences in selling and marketing functions. See the preamble to section 351.412 of the Department's regulations, 62 FR 27296, 27371 (May 19, 1997).

In its November 13, 2000 Section A responses, the POSCO Group claimed that there are two channels of distribution in the home market: one channel of distribution consists of sales made by POSCO, POCOS, and PSI, while the second channel of distribution consists of the sales made by the affiliated service centers. The Department has reviewed both channels of distribution of the POSCO Group and the related selling functions. In both channels of distribution, the POSCO Group performed the following sales-related activities in both channels of distribution: sales and marketing; freight and delivery arrangement; computer, legal, and accounting assistance and business-systems development assistance; advertising, and warranties. See The POSCO Group's November 13, 2000 Section A at 32-36. Next, we analyzed the selling functions of the affiliated service centers and determined that the only substantive additional function that the affiliated service centers perform is the slitting and shearing of coils. As this is not a selling function but rather a manufacturing operation, we have preliminary determined that the selling functions of the POSCO Group and affiliated service centers in the home market are essentially the same and thus made at the same level of trade. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Preliminary Results, 65 FR 54197, 54201 (September 7, 2000), and see Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Final Results of Antidumping Duty Administrative Reviews, 66 FR 3540 (January 16, 2001).

In the U.S. market, the POSCO Group reported one channel of distribution. See The POSCO Group's November 13, 2000 Section A at 31. In this U.S. channel of distribution, the POSCO Group performed the following sales-related activities: Freight and delivery arrangement; computer, legal, and accounting assistance and business-systems development assistance; market research; warranties; sales force development and end user contact and support; advertising; and quality control. See The POSCO Group's November 13, 2000 Section A at 32-36. We have analyzed the record and preliminary find that this is the only channel of distribution and thus level of trade in the U.S. market.

Finally, we compared the selling functions in the home market to the and U.S. market and found that the POSCO Group performed the following selling functions in both markets: freight and delivery arrangement; computer, legal and accounting assistance and business-systems development assistance; market research; warranties; sales force development and end user contact and support; advertising; and quality control. Additionally, the POSCO Group only has CEP sales in the U.S. market. As we have found the selling functions in both markets do not substantively differ (e.g., freight and warranties), we have preliminary determined that the selling functions performed on sales to the U.S. importer are the same as provided in the home market. Thus, we preliminary determine that sales within or between each market are made at the same level of trade and an adjustment pursuant to section 773(a)(7) is unwarranted. This is consistent with our practices in past reviews. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Preliminary Results, 65 FR 54197, 54203 (September 7, 2000).

SeAH

SeAH reported, and we verified, that SeAH sold merchandise at one LOT in the home market during the POR. SeAH's one LOT involved one channel of distribution in the home market, where SeAH made sales to unaffiliated end-users or distributors. SeAH performed all sales-related activities for these home market sales, including the following: Negotiating prices, meeting with customers, processing purchase orders, invoicing, arranging for freight and delivery, inventory, market research and extending credit. In addition, we found that sales at the home market LOT was at a more advanced stage of distribution (to end-users as well as distributors) compared to the CEP sales (sold only to distributors).

SeAH reported only CEP sales, with one market channel of distribution, in the U.S. market. In order to determine the level of trade in the U.S. market, we reviewed the selling activities associated with this channel of distribution. SeAH reported, and we verified, that all of SeAH's CEP sales in the U.S. market were made through Pusan Pipe America Inc. (PPA), to unaffiliated U.S. distributors. SeAH performed the following sales-related activities regarding sales through PPA: Processing purchase orders, invoicing PPA, and arranging for international freight. Therefore, for these U.S. sales, we determined that SeAH performed fewer and different selling functions than SeAH performed in the home market.

When the NV is established at a LOT that is at a more advanced stage of distribution than the LOT of the CEP transactions, the Department's practice is to adjust normal value to account for this difference. SeAH requested a CEP offset due to differences in level of trade between its home market and U.S. sales. As discussed above, we found that the LOT in the home market did not match the LOT of the CEP transactions. However, we were unable to quantify the LOT adjustment in accordance with section 773(a)(7)(A) of the Act. Instead, we applied a CEP offset to the NV-CEP comparisons, in accordance with section 773(a)(7)(B) of the Act.

Union

In the present review, Union stated that it does not claim a level of trade adjustment. To determine whether an adjustment is necessary, in accordance with the principles discussed above, we examined information regarding the distribution systems in both the United States and home markets, including the selling functions, classes of customer, and selling expenses.

In the home market, Union reported one level of trade. See Union's December 18, 2000 Section B Response at 25. Union stated that it sold subject merchandise through two channels of distribution: (1) End users; and (2) local distributors. According to Union, it performed the same sales-related activities in both channels of distribution, including inventory maintenance, after sales services and warranties, occasional post-sale warehousing, technical advice, freight and delivery arrangement, and credit terms. See Union's June 6, 2001 Supplemental Response at 2. Therefore, based on Union's submissions, we preliminary determine that there is one LOT in the home market.

In the U.S. market, Union reported one level of trade to its U.S. affiliate, Dongkuk International (“DKA”). See Union's December 18, 2000 Section C Response at 24. Union stated that DKA sold subject merchandise to U.S. customers through two channels of distribution: (1) End users; and (2) local distributors. Union claims that no differences exist between the two channels. According to Union, it performed the same sales-related activities in both channels of distribution, including occasional post-sale warehousing, technical advice, and freight and delivery arrangement. See Union's June 6, 2001 Supplemental Response at 2. Therefore, based on Union's submissions, we preliminarily determine that there is one LOT in the U.S. market.

As discussed above, Union reports essentially identical sales related activities in the home market and U.S. As such, the Department preliminary determines that all sales in the home market and the U.S. market were made at the same level of trade. Consequently, all price comparisons are at the same level of trade and an adjustment pursuant to section 773(a)(7) is unwarranted.

Arm's Length Sales

Dongbu, the POSCO Group, and Union reported that they made sales in the home market to affiliated parties. To test whether these sales were made at “arm's length” (i.e., at a price comparable to the price at which the exporter or producer sold the foreign like product to an unaffiliated purchaser), we compared the starting prices of sales to affiliated and unaffiliated customers net of all movement charges, direct selling expenses, discounts and packing. See 19 CFR 351.403(c) and section 773(a)(5) of the Act. Where prices to the affiliated party were, on average, 99.5 percent or more of the price to the unrelated party, we determined that sales made to the related party were at arm's length. Where no affiliated customer ratio could be calculated because identical merchandise was not sold to unaffiliated customers, we were unable to determine that these sales were made at arm's length and, therefore, excluded them from our analysis. See e.g., Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 (July 9, 1993). Where the exclusion of such sales eliminated all sales of the most appropriate comparison product, we made comparisons to the next most similar model.

Currency Conversion

For purposes of the preliminary results, we made currency conversions based on the exchange rates in effect on the dates of the U.S. sales as published by the Federal Reserve Bank of New York. Section 773A(a) of the Act directs the Department to use a daily exchange rate in effect on the date of sale of subject merchandise in order to convert foreign currencies into U.S. dollars, unless the daily rate involves a “fluctuation.” In accordance with the Department's practice, we have determined, as a general matter, that a fluctuation exists when the daily exchange rate differs from a benchmark by 2.25 percent. See, e.g., Certain Stainless Steel Wire Rods from France: Preliminary Results of Antidumping Duty Administrative Review, 61 FR 8915, 8918 (March 6, 1996) and Policy Bulletin 96-1: Currency Conversions, 61 FR 9434, (March 8, 1996). The benchmark is defined as the rolling average of rates for the past 40 business days.

Preliminary Results of the Reviews

As a result of these reviews, we preliminarily determine that the following weighted-average dumping margins exist:

Pursuant to 19 CFR 351.224(b), the Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results within five days after the publication of this notice. Pursuant to 19 CFR 351.309, interested parties may submit written comments in response to these preliminary results. Case briefs must be submitted within 30 days after the date of publication of this notice, and rebuttal briefs, limited to arguments raised in case briefs, must be submitted no later than five days after the time limit for filing case briefs. Parties who submit argument in this proceeding are requested to submit with the argument: (1) A statement of the issue, and (2) a brief summary of the argument. Case and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310, within 30 days of the date of publication of this notice, interested parties may request a public hearing on arguments to be raised in the case and rebuttal briefs. Unless the Secretary specifies otherwise, the hearing, if requested, will be held two days after the date for submission of rebuttal briefs, that is, thirty-seven days after the date of publication of these preliminary results. The Department will publish the final results of this administrative review, including the results of its analysis of issues raised in any case or rebuttal brief or at a hearing not later than 120 days after the date of publication of these preliminary results.

Upon issuance of the final results of this review, the Department shall determine, and the U.S. Customs Service shall assess, antidumping duties on all appropriate entries. Exporter/importer-specific assessment rates shall be calculated in accordance with 19 CFR 351.212(b). This is done by dividing the total dumping margins for the reviewed sales by the total entered value of those reviewed sales for each importer. The U.S. Customs Service shall be directed, at the issuance of the final results of this review, to assess the resulting percentage margin against the entered customs values for the subject merchandise on each of that importer's entries under the relevant order during the review period.

Cash Deposit

The following deposit requirements will be effective upon publication of this notice of final results of administrative reviews only for corrosion-resistant products for all shipments of the subject merchandise from Korea entered, or withdrawn from warehouse, for consumption on or after the date of publication, as provided by section 751(a)(1) of the Act: (1) The cash deposit rates for the reviewed company will be the rate shown above; (2) for previously reviewed or investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the original less-than-fair-value (LTFV) investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be 17.70 percent for certain corrosion-resistant carbon steel flat products, the “all others” rate established in the LTFV investigations. See Antidumping Duty Orders on Certain Cold-Rolled Carbon Steel Flat Products and Certain Corrosion-Resistant Carbon Steel Flat Products from Korea, 58 FR 44159 (August 19, 1993). These deposit requirements shall remain in effect until publication of the final results of the next administrative review.

As a result of a Sunset Review, the Department has revoked the antidumping duty order for cold-rolled carbon steel products from Korea, effective January 1, 2001. See Revocation of Antidumping and Countervailing Duty Orders on Certain Carbon Steel Products From Canada, Germany, Korea, the Netherlands, and Sweden, 65 FR 78467 (Dec. 15, 2000). Therefore, we have instructed the Customs Service to terminate suspension of liquidation for all entries of cold-rolled carbon steel products made on or after January 1, 2000, and antidumping cash deposit requirements for this merchandise are no longer necessary.

Entries of subject merchandise made prior to January 1, 2000, will continue to be subject to suspension of liquidation and antidumping duty deposit requirements. The Department will complete any pending reviews of this order and will conduct administrative reviews of subject merchandise entered prior to the effective date of revocation in response to appropriately filed requests for review.

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

These administrative reviews and notice are in accordance with sections 751(a)(1) and 777(i)(1) of the Act.